Are Fat Shack franchisees required to enter into agreements with suppliers?

According to Fat Shack's 2025 Franchise Disclosure Document, franchisees may be required to enter into agreements with suppliers depending on the specific supplier they use. Fat Shack mandates that franchisees purchase food and drink products, paper products (including cups, lids, napkins, and sandwich wrap paper), gift cards, loyalty cards, marketing materials, printed materials (such as posters and branded merchandise), and equipment from designated or approved suppliers.

This requirement ensures that Fat Shack maintains consistent product quality and brand standards across all franchise locations. While Fat Shack negotiates pricing arrangements with some suppliers, franchisees should not rely on the continued availability of any particular pricing or distribution arrangement. Fat Shack also has the right to receive payments, rebates, commissions, incentives, or other benefits from suppliers based on their dealings with franchisees; for example, during the fiscal year ended December 31, 2024, Fat Shack received $0.22 per case as a result of franchisee purchases from one supplier.

Prospective franchisees need to be aware that the costs of purchases from designated or approved sources can range from 46% to 75% of the total cost of establishing a Fat Shack Restaurant and approximately 25% to 50% of the total operating costs. If a franchisee wishes to use a non-approved supplier, they must seek prior written approval from Fat Shack, which may involve providing specifications, photographs, drawings, and samples for evaluation. The franchisee will bear the costs associated with testing and investigation to determine if the proposed items or suppliers meet Fat Shack's standards, and Fat Shack reserves the right to withhold approval for any reason.